Why Long-Term Unemployment Keeps Rising

By Unemployment-Extension.org | January 7, 2015 at 11:16 PM |

While the short-term unemployment rate in the United States seems to have declined to what some economists optimistically refer to as normal, the same cannot be said for the long-term unemployment rate.

Currently, approximately 2 percent of the country’s labor force remains unemployed. Furthermore, they have been unemployed for at least six months. Such a long run of long-term unemployment has left many economists somewhat surprised as many expected long-term unemployment would sharply decline with the expiration of the long-term unemployment benefits at the end of last year. That was not the case.

In fact, research shows that finding and keeping a job can be particularly challenging for the long-term unemployed. A study tracking individuals who have been out of work for at least six months discovered that 23 percent of those individuals located a job within the first few months.

One year later, more than 30 percent of the group was once again unemployed or had completely left the workforce. This would seem to suggest that long-term unemployment is not only challenging but also difficult to escape permanently.

A variety of factors could be contributing to such issues, which has become a vicious cycle for many people. According to some economists, the skills of workers tend to deteriorate when they remain unemployed for long periods of time. As a result, the long-term unemployed become less employable. Still other economists point out that some workers may be prone to accepting jobs that do not match their abilities or are even unstable. This could lead to an increased likelihood of the job ending prematurely.

Furthermore, of those who do seek reemployment, the jobs located may not always be regular, full-time employment. Workers are also significantly less likely to be earning the same amount of money they made prior to becoming unemployed. Consequently, reemployment does not always provide a long-term solution.

Despite the fact that some economists tout that there is no discrimination among the long-term unemployed, research would seem to prove otherwise. A research conducted by Northeastern University found that resumes showing periods of more than six months of unemployment were rejected uniformly.

This confirmed to hold the truth even in the cases of resumes showing significant work experience. Conclusions of the study seemed to indicate that employers are more eager to hire individuals with less work experience who were unemployed recently than they were to hire candidates with more relevant work experience but who had undergone a longer period of unemployment.

It is precisely this type of dynamic that has produced what is sometimes referred to as the unemployment trap, meaning that individuals, who are unemployed, are more likely to remain unemployed.

While there have been significant discussions involving the potential for an extension of the unemployment benefits that lapsed at the end of December 2013, there has yet to be any long-term unemployment situation changing action taken. Extended unemployment benefits expired by Jan 1, 2014, leaving nearly 2 million individuals who had been unemployed for six months or longer without assistance.